There’s something about Warren Buffett that makes me feel warm and tingly all over and it’s not his net worth of $62 billion! Rather it’s a combination of his personality, habits, and life philosophy. I first saw Warren Buffett on Charlie Rose (he and Charlie are very good friends) and become captivated with him from the get go (I remember thinking, how could this affable and happy Midwestern man be the world’s richest person?).
Recently, I’ve started reading a new biography on Buffet by Alice Schroeder entitled, The Snowball: Warren Buffett and the Business of Life. Schroeder was an insurance analyst that covered Berkshire Hathaway (Buffett’s company that basically buys other companies) and she got to know Buffett well over a number of years, so they collaborated on a rather bulky biography. Reading through the first couple of chapters got me thinking: if Buffett leads a frugal and thrifty life then why in the world isn’t every other person in this country not living like him? Buffett’s habits and life philosophy are classic “Millionaire (or in his case, Billionaire) Next Door”; here’s a little about how he lives his life:
- He lives in the same house he bought in 1958 for $31,000.
- He lives and works where he grew up, namely Omaha, Nebraska.
- He believes in spending most of his time with his famly.
- He believes in helping his family and children.
- He does not drive a fancy car (I think he was driving a Lincoln Town Car for a number of years).
- He does not own fancy clothes.
- He pays himself a salary of $100,000, per year.
- He believes in charity and the social welfare system (much of his wealth will go to organizations addressing world health and poverty concerns).
- He does not like fancy food (steak, potatoe chips, etc. are amongst his favorite foods).
- He does not use a computer or a cell phone.
- He believes in reading and learning every day (including going through many newspapers each day).
- He believes in value investing (only investing in companies and sectors he knows, he is famous for never getting into Internet/Technology stocks).
- He likes using his spare time playing games (including Bridge).
You could go on and on about his habits, but I’m sure you see the trends; that is, he does not lead an extravagant lifestyle nor does he find value or stimulation in things that require spending lots of money. In sum, Buffett really is the perfect example of someone leading a practical, yet at the same time very fulfilling and stimulating, life. And I believe this is exactly at the root of why people spend and live beyond their means, namely, because they are looking for fulfillment and value in the wrong things (i.e., material things). Managing money and letting money work for you becomes very easy when you don’t turn to money to live or define your life. Of course you need to eat, clothe yourself, and have a roof over your head, but when you use most of your money to earn a return on investment then you’ve figured out how to lead a life like Buffett’s – a practical life that doesn’t derive meaning via spending dollars for enjoyment, rather a life that finds meaning in being with family and friends, having hobbies, working for social reform, etc. Oh, it also helps to not care what people think about you (this is being an individual).
Interesting post Vincent, but I wonder how much of Buffett’s supposedly frugal lifestyle can be attributed to manufacturing this public image. He is after all, by his own account, “addicted” to flying on his private jet.
I have been a Buffett follower for a while now, and I too read Schroeder’s The Snowball (a hell of a long read!)
I very much admire Buffett for many reasons, and I love hearing him speak – pretty much everyone does. I agree with most of your bullet points, except these:
•He believes in spending most of his time with his famly.
WRONG – By his own admission, he spent practically zero time with his wife and children. His wife Suzie did about 95% of the childraising. Warren spent almost all of his time with his friends, all of whom, while lovely people, were business contacts. It appears that he gave a greater effort in his life to Kate Graham, owner of the Washington Post, than to his own wife. All that said, his kids do now respect him.
•He believes in helping his family and children.
This is a contentious point, mostly because of how little time he spent with them. A person’s time and loving attention is the greatest help. But I do give him great credit for NOT doing the easiest thing he could have done; lavish them with cash. He made it a point that his children had to largely make their own way, and as we now see, his inheritance is going to charity. I strongly agree with this principle – enable kids and promise them a fat inheritance, and watch them become lazy and entitled. Warren knew better.
•He does not own fancy clothes.
It turns out that he is almost childlike in this regard – he can’t even dress himself without someone else’s help. Well, he can put on the clothes, but he needs someone else to pick out the clothes, lay them out, wash them, etc. or he’s helpless.
•He does not like fancy food (steak, potatoe chips, etc. are amongst his favorite foods).
This is pretty much the only thing that annoys me about Buffett, and with your dedication to healthy and conscious eating, I think you’d agree. Once again, he behaves like a child – he’s an absolute coward when it comes to food. He demands only steak, hamburgers, peanuts, and coke. Give him any of your wonderful Italian dishes, and he’ll break into a cold sweat and retreat to the safe world of hamburgers. His diet is unhealthy (hey, that’s up to him), but it’s also irresponsible: the beef he eats three meals a day is very environmentally impactful, and for all of his belief in corporate ethics, he tends to ignore corporate negative externalities. But most of all, I think of his eating as that of a spoiled and timid child – he can’t even drink a glass of water, for crying out loud!
Overall though, I do love Buffett. He’s an utter delight to listen to, and he’s got wonderful perspective on life. And he really, really, really, gets business, investing, and the economy – the important parts of it, not the little nit-picking irrelevant stuff that idiots tend to gravitate toward.